November 16, 2015 / 11:14 AM / 5 years ago

METALS-Demand fears push copper to lowest in more than six years

* Codelco offers much lower $98 2016-term premium to China
    * Demand recovery needed to push copper into deficit
    * Coming Up: U.S. New York Fed manufacturing Nov at 1330 GMT

 (Adds closing prices)
    By Pratima Desai
    LONDON, Nov 16 (Reuters) - Copper prices fell to their
lowest in more than six years on Monday in a sell-off triggered
by the attacks in Paris, a stronger dollar and poor demand
prospects in top consumer China.
    Benchmark copper on the London Metal Exchange slid
as low as $4,685 a tonne in early trading, matching the low seen
in June 2009. The metal used in power and construction closed
down 2.8 percent at $4,690. 
    Risky assets, such as commodities and equities, came under
pressure as investors turned to safer assets, such as the
dollar, after suspected Islamist militants launched coordinated
attacks across Paris. 
    "We're struggling to see light at the end of the tunnel,
things aren't getting any better in China, we can't see what is
going to turn things around for industrial metals," Cantor
Fitzgerald analyst Asa Bridle said. 
    A higher U.S. currency makes dollar-denominated commodities
more expensive for non-U.S. firms, a relationship used by funds
that buy or sell using signals from mathematical models. 
    Slowing demand growth in China has been a major reason for
copper's losses of about 25 percent since the 2015 peak of
$6,481 in May. 
    "Copper has hit the $4,700 somewhat quicker than I thought
it might ... there is no reason why $4,400 (an area of
congestion from 2009) should be the next level to test," said
Malcolm Freeman, a director at Kingdom Futures.
    The latest signs of weaker Chinese demand come from Chile's
Codelco, the world's top copper producer, which has
cut its 2016 premium to China for refined metal by more than a
quarter to a three-year low of $98 a tonne. 
    Lower prices have persuaded some large mining companies,
such as Freeport McMoRan and Glencore, to scale
back production. But the cuts are sufficient, some analysts say.
    "Ongoing price weakness, in spite of price-related output
cuts, is consistent with our view that producers do not move
markets into deficit by cutting supply ... rather they move
markets closer to balance (than they otherwise would be),"
Goldman Sachs said in a note.
    "A demand recovery along with further supply discipline is
required to see markets such as copper move into deficit."
    A recent Reuters survey showed analysts expect the global
copper market to have a surplus of 349,000 tonnes this year and
177,000 tonnes in 2016. 
    Three-month aluminium fell to $1,465.50 a tonne, its
lowest since Oct 28. The metal used in transport and packaging
was last down 1.6 percent at $1,467.
    Zinc was down 2.1 percent at $1,587, lead 
slid 0.9 percent to $1,596.5, tin lost 0.3 percent to
$14,700 and nickel fell 1.2 percent to $9,310 a tonne.
    Three month LME copper          
    Most active ShFE copper         
    Three month LME aluminium       
    Most active ShFE aluminium      
    Three month LME zinc            
    Most active ShFE zinc           
    Three month LME lead            
    Most active ShFE lead           
    Three month LME nickel          
    Most active ShFE nickel          
    Three month LME tin             
    Most active ShFE tin                    

 (Editing by Louise Heavens and David Goodman)
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